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Bosnia and Herzegovina 2020 Report EUROPEAN COMMISSION Brussels, 6.10.2020 SWD(2020) 350 final COMMISSION STAFF WORKING DOCUMENT Bosnia and Herzegovina 2020 Report Accompanying the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions 2020 Communication on EU Enlargement Policy {COM(2020) 660 final} - {SWD(2020) 351 final} - {SWD(2020) 352 final} - {SWD(2020) 353 final} - {SWD(2020) 354 final} - {SWD(2020) 355 final} - {SWD(2020) 356 final} EN EN Table of Contents 1. Introduction 3 1.1. Context 3 1.2. Summary of the report 4 2. Fundamentals first: political criteria and rule of law chapters 6 2.1. Fundamentals first: Functioning of democratic institutions and Public Administration Reform 6 2.1.1. Democracy 6 2.1.2. Public administration reform 12 2.2.1. Chapter 23: Judiciary and fundamental rights 15 2.2.2. Chapter 24: Justice, freedom and security 34 3. Fundamentals first: economic development and competitiveness 46 3.1. The existence of a functioning market economy 47 4. Good neighbourly relations and regional cooperation 56 5. Ability to assume obligations from membership 58 5.1. Chapter 1: Free movement of goods 58 5.2. Chapter 2: Freedom of movements for workers 60 5.3. Chapter 3: Right of establishment and freedom to provide services 61 5.4. Chapter 4: Free movement of capital 62 5.5. Chapter 5: Public procurement 63 5.6. Chapter 6: Company law 65 5.7. Chapter 7: Intellectual property law 66 5.8. Chapter 8: Competition policy 67 5.9. Chapter 9: Financial services 69 5.10. Chapter 10: Information society and media 71 5.11. Chapter 11: Agriculture and rural development 72 5.12. Chapter 12: Food safety, veterinary and phytosanitary policy 73 5.13. Chapter 13: Fisheries 75 5.14. Chapter 14: Transport policy 76 5.15. Chapter 15: Energy 79 5.16. Chapter 16: Taxation 82 5.17. Chapter 17: Economic and monetary policy 83 5.18. Chapter 18: Statistics 84 1 5.19. Chapter 19: Social policy and employment 86 5.20. Chapter 20: Enterprise and industrial policy 90 5.21. Chapter 21: Trans-European Networks 92 5.22. Chapter 22: Regional policy and coordination of structural instruments 94 5.25. Chapter 25: Science and research 96 5.26. Chapter 26: Education and culture 97 5.27. Chapter 27: Environment and climate change 99 5.28. Chapter 28: Consumer and health protection 103 5.29. Chapter 29: Customs union 105 5.30. Chapter 30: External relations 107 5.31. Chapter 31: Foreign, security and defence policy 108 5.32. Chapter 32: Financial control 110 5.33. Chapter 33: Financial and budgetary provisions 113 Annex I – Relations between the EU and Bosnia and Herzegovina 115 2 1. Introduction 1.1. Context In February 2016, the country applied for EU membership and in September 2016 the European Council invited the European Commission to submit its opinion on the merits of Bosnia and Herzegovina's application. In May 2019, the Commission adopted its Opinion and accompanying analytical report on Bosnia and Herzegovina’s EU membership application.1 The Opinion identifies 14 key priorities for Bosnia and Herzegovina to fulfil in order to be recommended for the opening of accession negotiations, in the areas of democracy / functionality, the rule of law, fundamental rights, and public administration reform. In its December 2019 conclusions, the EU Council welcomed the Opinion and invited the Commission to focus its annual reports on Bosnia and Herzegovina, starting with the one in 2020, on the implementation of the key priorities from the Opinion.2 Bosnia and Herzegovina continues to implement the Stabilisation and Association Agreement and the meetings of the joint bodies under the agreement took place regularly, except for the parliamentary committee, which has yet to adopt its rules of procedures. The public political commitment of the authorities at all levels of government to the strategic goal of European integration remained to a large extent merely declarative and was not turned into concrete actions, as political leaders spent the reporting period engaging in party politics and unconstructive political disputes, which impeded the appointment of a new government until late 2019, 14 months after the October 2018 elections, and hindered its work afterwards. Some steps have been taken in the recent months, amid the COVID-19 pandemic, to address the key priorities from the Opinion. In October 2019, the Council of Ministers adopted an action plan for the implementation of the recommendations from the Commission’s 2019 analytical report, whose content was not fully agreed among all levels of government. The Constitutional Court repealed the provision on the death penalty in the Republika Srpska entity constitution, fulfilling part of key priority 10. Legislative amendments following a political agreement in June 2020 should allow holding local elections in Mostar in December for the first time since 2008, thus fulfilling part of key priority 1. In July 2020, all levels of government adopted the strategic framework on public administration reform, contributing to key priority 14. Bosnia and Herzegovina adopted the revised National War Crimes Strategy in September 2020, contributing to key priority 5. Preparations are also ongoing to hold the joint parliamentary committee. Bosnia and Herzegovina needs to move forward on the other key priorities too. The outbreak of the COVID-19 pandemic is a global shock that has not spared the Western Balkans. It represents an unprecedented burden on their health and social protection systems. The final extent of its footprint in terms of loss of human lives and damage to the economies is still difficult to assess, but early Commission estimates foresee a drop of between 4 and 6% of Gross Domestic Product (GDP) in the region. Thousands of citizens are at risk of losing their jobs, and temporary government support measures (unemployment benefits, deferrals/waivers to tax and social security contributions, etc.) have an important fiscal impact. 1 SWD(2019) 222 final, COM(2019) 261 final 2https://www.consilium.europa.eu/en/press/press-releases/2019/12/10/council-conclusions-on-commission- opinion-on-bosnia-and-herzegovina-s-application-for-membership-of-the-european-union/ 3 While the EU is itself heavily affected by the pandemic, it has spared no time and effort to provide essential and unparalleled support to the Western Balkans. This includes financial support of more than EUR 3.3 billion for countries in the region to address the immediate health crisis and resulting humanitarian needs, as well as longer term and structural impact on their societies and economies. Given the European perspective of the Western Balkans, the EU is also treating the region as privileged partners by associating them with the Union’s mechanisms and instruments. These include the Health Security Committee, Joint Procurement Agreements, Union Civil Protection Mechanism, Solidarity Fund, consular assistance in repatriation or exemption from temporary EU export restrictions of medical equipment. These and other measures have provided immediate relief and are a clear message of the EU’s political commitment towards the region. In the initial response to the COVID-19 outbreak Bosnia and Herzegovina reacted promptly and closely followed global recommendations by introducing mitigation measures to prevent, slow down and control the transmission of the virus. The authorities also increased health system capacities and re-oriented health providers towards COVID-19 designated facilities. Despite the initial success of the health authorities to prevent and control the spread of the virus, early relaxation of the restrictive measures was followed by an epidemiological peak during the summer months. By all relevant parameters and benchmarks, the response of the health system was comparatively effective in curbing the initial COVID-19 outbreak in the country, however, coping with the later peak proved to be challenging. During the COVID-19 outbreak, health services were provided to all persons in Bosnia and Herzegovina, including migrants and asylum seekers, irrespective of citizenship or health insurance status. The COVID-19 crisis demanded a high level of coordination among all levels of government which proved challenging in practice. The established crisis management bodies acted in their respective jurisdictions, without countrywide harmonisation of decisions and actions. The fragmentation of the healthcare system compounded coordination difficulties, and formal strategic response plans were not developed. Restrictive measures were relaxed gradually and in a more harmonised manner throughout the country. Citizens’ compliance with the protective epidemiological measures remains limited. It is of utmost importance that emergency measures taken during the crisis are not at the expense of fundamental principles and values and that such measures remain proportionate, time-bound and subject to democratic oversight. 1.2. Summary of the report Regarding the political criteria, during most of the reporting period the Parliamentary Assembly of Bosnia and Herzegovina was blocked for political reasons, which resulted in a legislative backlog, and the Council of Ministers acted in caretaker function, pending the appointment of a new government, which only took place in December 2019, 14 months after the general elections. The Federation entity government is still in a caretaker function. Bosnia and Herzegovina’s Constitution remains in breach of the European Convention on Human Rights (ECHR), as per the Sejdić-Finci and related cases. No progress was made in improving the electoral framework in line with European standards and ensuring transparency of political party financing. Amendments adopted in July 2020 should allow holding local elections in Mostar for the first time since 2008. Preparations are also ongoing to hold the Stabilisation and Association Parliamentary Committee, as well as develop and adopt a national programme for the adoption of the EU acquis. No progress was made in ensuring an 4 enabling environment for civil society.
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